Asian pacific economic cooperation an appraisal

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Abstract
History of nations in times past often record some form of relations between them and other nations. Thereafter,
the rise of sovereign states transformed the nature of relations amongst states as they began to form alliance with
other states and regions. Consequently, regional and inter-regional organization continued to rise in global
history. However, the emergence of Asian Pacific Economic Cooperation (APEC) in 1989 advanced open interregional
integration. This paper has documented the background history of APEC. It showed there strategic
economic cooperation dynamics as well as the security dynamics that the organization has adopted in the course
of their evolving history. The work equally captured the challenges faced by APEC and called for progressive,
sustainable, inter-regional strategy in order to for the member states to attain greater cooperative height in world
economic relations.

American International Journal of Contemporary Research Vol. 4 No. 1; January 2014 Asian Pacific Economic Cooperation: An Appraisal Chukwuma Osakwe, PhD Department of History and International Studies Nigerian Defence Academy Kaduna Kelechi Johnmary Ani Department of History and Strategic Studies Federal University Ndufu-Alike, Ikwo Ebonyi State Nigeria Abstract History of nations in times past often record some form of relations between them and other nations. Thereafter, the rise of sovereign states transformed the nature of relations amongst states as they began to form alliance with other states and regions. Consequently, regional and inter-regional organization continued to rise in global history. However, the emergence of Asian Pacific Economic Cooperation (APEC) in 1989 advanced open interregional integration. This paper has documented the background history of APEC. It showed there strategic economic cooperation dynamics as well as the security dynamics that the organization has adopted in the course of their evolving history. The work equally captured the challenges faced by APEC and called for progressive, sustainable, inter-regional strategy in order to for the member states to attain greater cooperative height in world economic relations. Key Words: Asia, Pacific, Economy, History, Trade Introduction An inquiry into the wealth of nations (Smith, 1770) in contemporary world politics (Kegley and Wittkoppf, 1997) reveals that the economies of individual and multilateral states are centred on economic cooperation. This has made “the politics of international economic relations” (Spero, 1980), which is a branch of international relations (Goldstein, 1994) to become a politics of economic cooperation. Economic cooperation was defined by Rourke (2002:484) as “a process whereby sovereign states, cooperate with one another bilaterally or multilaterally through international governmental organizations or process”. It is a form of cooperation that could be found amongst state and non-state actors across the regions and continents of the globe. It means a close intertwining through a process of formal agreement or informal circumstances, in which the countries involved begin to surrender some degree of their national sovereignty and act as an economic unit. It connotes a “sense of community” amongst its population (Deutsh, 1968). The idea of economic cooperation is closely related to the idea of “economic integration” (Bela, 1961). Asogwa (1999; 109) wrote that “economic integration can be viewed as a process or condition which encompasses measures to abolish discrimination between economic units belonging to different national states and a condition in which various forms of discrimination between national economies are absent. As such economic integration can take various forms, from free trade area to customs union, to common market, to economic union, to complete economic integration”. Feld (1979) wrote that economic integration is divided into five different stages ranging from “a free trade area to a custom union, a common market, an economic union and finally a monetary union”. Asogwa (2009:102) argued that economic cooperation was a product of the “world community” concept or what Burton (1972) called ‘world society’ that emanated after the World War II. El-Agraa (1997) wrote that since the end of the World War II, “for all the far reaching economic cooperative effort at the global level, the degree of activity and economic cooperation and integration at the regional level is even more advanced”. 230

American International Journal of Contemporary Research Vol. 4 No. 1; January 2014 It could be recalled that the rise of cold war, due to the bi-polar international relations of the post-World War II years and the rise of President Gorbechev’s popular reforms (Dawisha, 1990) known today as glasnost and perestroika in USSR (Mbeye, 1989) created room for the massive neo-scramble, and partition of the world into either the communist block or the capitalist block, with few trying to survive in their acclaimed posture of nonalignment till “the end of the cold war” (Hogan, 1992). APEC laid the foundation for emergence and strategic competition in the “international politics of the post-cold war era,” (Echezona, 1998) in order to be viable in the “new world order” (Echezona, 1993; Hoffman, 1980). The Association of South East Asian Nations (ASEAN) was formed in 1967 to promote industrial, socio-cultural and economic cooperation. Structurally, China and Japan threatened and dominated the sub-region as “hegemony and that created room for cooperation and discord in their political economy” (Keohane, 1984). The ASEAN states consequently sought to balance against this domination by involving the entire Pacific Basin and outside states such as United States in the regional economic and political diplomacy. The end of Cold War era and the emergence of United States led to a uni-polar world politics that made her exercise leadership might on ASEAN. In 1989 the idea of APEC came into existence and on the initiative of Australia, a forum of originally fifteen Pacific Rim countries was formed. In January 1989, Australian Prime Minister Bob Hawke called for more effective economic cooperation across the Pacific Rim region. This led to the first meeting of APEC in the Australian capital of Canberra in November, chaired by Australian Foreign Affairs Minister, Gareth Evans, which was attended by political ministers from twelve countries, the meeting concluded with commitments for future annual meetings. Countries of the Association of Southeast Asian Nations (ASEAN) opposed the initial proposal, instead proposing the East Asia Economic Caucus which would exclude non-Asian countries such as the United States, Canada, Australia, and New Zealand. This plan was opposed and strongly criticized by Japan and the United States. Consequently, in 1992, a secretariat was built in Singapore. Asia-Pacific Economic Cooperation (APEC) beame a forum for 21 Pacific Rim countries (formally known as Member Economies) that seeks to promote “international trade and finance” (Onwudinjo, 1996) through free trade and economic cooperation throughout the Asia-Pacific region. Evans and Newnham (1997:36) wrote that “1993 witnessed two key developments that were headed by ASEAN; the formation of the ASEAN Regional Forum, which linked the ASEAN states with eleven Pacific Basin countries, Australia and the institutionalization of Asia Pacific Economic Cooperation” (APEC) with its secretariat in Singapore. APEC member-states in 1996 were eighteen but they are currently twenty one. Amongst them include Australia that joined in 1989, Brunei in 1989, Canada in 1989, Chile in 1994, People’s Republic of China in 1991, Hong Kong in 1991, Indonesia in 1989, Japan in 1989, Malaysia in 1989, Mexico in 1993, New Zealand in 1989, Papua New Guinea in 1993, Peru in 1998, Philippines in 1989, Republic of China (Chinese Taipei) Russia in 1998, Singapore in 1989, South Korea in 1989, Thailand in 1989, United States of America in 1989 and Vietnam in 1998. The agenda of free trade was a sensitive issue for the developing new international economies and for ASEAN economies to explore new export market opportunities of the natural resources such as natural gas and seek regional economic integration (industrial integration) by means of foreign direct investment. APEC members account for approximately 40% of the world's population, approximately 54% of the world's gross domestic product and about 44% of world trade (www.wikipedia.org). This high GDP is aimed at enhancing their strategic position in the international economy. The games nations play (Spanier, 1978) is simply promoted by strategic interests towards certain specific and non-specific goals. Strategic Dimensions of Economic Cooperation Trade in the APEC region continues to outperform the rest of the world, weathering global economic uncertainty, according to new APEC Policy Support Unit (PSU) research that was presented to APEC Ministers during their meeting in Vladivostok. Growth in the nominal USD value of merchandise trade for APEC economies moderated to 4.6 percent in May 2012, down from 12.1 percent growth in December 2011 due to weak global economic activity and deflated traded good prices. But it was enough to remain at the top of the heap, by comparison. The rest of the world contracted by 5.6 percent in May 2012. “Though trade performance varied across the region in the first half of 2012, due to weak global demand and sharp falls in commodity prices, APEC members’ economic growth has been fairly robust and resilient” said PSU Director, Dr Denis Hew. “Foreign direct investment across APEC economies is also encouraging,” he adds. As a whole, the region accounted for nearly half of the growth of global FDI inflows in 2011. 232

American International Journal of Contemporary Research Vol. 4 No. 1; January 2014 APEC is aimed at generating a greater amount and share of external trade and raise the standard of living of the populations of member states. Internally, the greatly enlarged markets promote greater strategic economic activity and greater strategic scale of production, allowing for the benefit of economies of scale, strategic cost reduction and strategic cost competitiveness. All gives member states advantages in export trade. APEC is considering the prospects and options for a Free Trade Area of the Asia-Pacific (FTAAP), which would include all APEC member economies. Since 2006, the APEC Business Advisory Council, promoting the theory that a free trade area has the best chance of converging the member nations and ensuring stable economic growth under free trade, has lobbied for the creation of a high-level task force to study and develop a plan for a free trade area. The proposal for a FTAAP arose due to the lack of progress in the Doha round of World Trade Organization negotiations, and as a way to overcome the "spaghetti bowl" effect created by overlapping and conflicting elements of the umpteen free trade agreements—there are approximately 60 free trade agreements, with an additional 117 in the process of negotiation in Southeast Asia and the Asia-Pacific region. The FTAAP is more ambitious in scope than the Doha round, which limits itself to reducing trade restrictions. The FTAAP would create a free trade zone that would considerably expand commerce and economic growth in the region. The economic expansion and growth in trade could exceed the expectations of other regional free trade areas such as the ASEAN Plus Three (ASEAN + China, Japan, and South Korea). As a relatively large economic bloc, the body has more effect than individual sovereign states in negotiating traderelated matters with member countries and other external states. The APEC Business Advisory Council (ABAC), for instance, was created by the APEC Economic Leaders in November 1995 with the aim of providing advice to the APEC Economic Leaders on ways to achieve the Bogor Goals and other specific business sector priorities, and to provide the business perspective on specific areas of cooperation as well as enhance transnational relations (Keohane and Nye, 1972). Each economy nominates up to three members from the private sector to ABAC. These business leaders represent a wide range of industry sectors. ABAC provides an annual report to APEC Economic Leaders containing recommendations to improve the business and investment environment in the AsiaPacific region, and outlining business views about priority regional issues. ABAC is also the only non-governmental organisation that is on the official agenda of the APEC Economic Leader’s Meeting (www.wikipaedia.org). The benefits and costs of trade to member countries varies according to the relative size of their economies, to the level of development reached and how well endowed the state is in terms of resources and human capital development. At the 2001 Leaders' Meeting in Shanghai, APEC leaders pushed for a new round of trade negotiations and support for a program of trade capacity-building assistance, leading to the launch of the Doha Development Agenda a few weeks later. The meeting also endorsed the Shanghai Accord proposed by the United States, emphasising the implementation of open markets, structural reform, and capacity building. As part of the accord, the meeting committed to develop and implement APEC transparency standards, reduce trade transaction costs in the Asia-Pacific region by 5 percent over 5 years, and pursue trade liberalization policies relating to information technology, goods and services. “For APEC, development cooperation is seen as an adjunct to a process of market and trade liberalization” (Akpuru-Aja, 2002:123). Apart from giving secure and stable access to a sizeable market, APEC has encouraged investment flow into the member states, not only from business corporations in the member advanced countries but also from outside, hence giving wider investment opportunity to member states. Since its formation in 1989, APEC has held annual meetings with representatives from all member economies. The first four annual meetings were attended by ministerial-level officials. Beginning in 1993, the annual meetings are named APEC Economic Leaders' Meetings and are attended by the heads of government from all member economies except Taiwan, which is represented by a ministerial-level official. Akpuru-Aja (2002:123) pointed out that the APEC summit in Manila in 1996 highlighted six themes; developing human capital, fostering efficient capital markets, strengthening economic infrastructure, harnessing technologies, promoting environmentally sustainable growth and encouraging small and medium enterprises. The annual Leaders' Meetings are not called summits. APEC and Issues of Security In 1997, the APEC meeting was held in Vancouver. Controversy arose after officers of the Royal Canadian Mounted Police used pepper spray against protesters. The protesters objected to the presence of autocratic leaders such as Indonesian President, Suharto. In 2003, Jemaah Islamiah leader Riduan Isamuddin had planned to attack the APEC Leaders Meeting to be held in Bangkok in October. 234

American International Journal of Contemporary Research Vol. 4 No. 1; January 2014 Conclusion Economic cooperation has become the order of the day in “the modern world system” (Wallerstein, 1974). APEC has promoted “modernization and transformation of international relations” (Morse, 1976). Consequently, in the search for a theory (Mansback & Vasquez, 1981; Roper, 1978) to be used in analysing this paper, the open regionalism was adopted as the framework of economic and political analysis (Eaton, 1965). The paper showed how the region has progressed in the bid to attain a standard free trade economy. Hence, since 2005, the APEC leaders meeting focused on the Doha round of World Trade Organization (WTO) negotiations, leading up to the WTO Ministerial Conference of 2005 held in Hong Kong in December. Weeks earlier, trade negotiations in Paris were held between several WTO members, including the United States and the European Union on reducing agricultural trade barriers. APEC leaders at the summit urged the European Union to agree to reduce farm subsidies. Within APEC, lesser developed peripheral countries like Papua New Guinea, Chile and Vietnam etc. gains from the external economic diplomacy with the giant economies of China, USA, and Japan. Notwithstanding the benefit disparities, due to differences in diplomatic ties and agreements, the deliberate aids and grants policies as well as other forms of economic assistance from the richer to the poorer nations helps in balancing and checkmating ‘absolute losers’ while strengthening ‘relative losers’ in the game of nations due to market integration. Today, APEC has become a popular “international organization in the modern world” (Taylor, 1995). Akpuru-Aja (2002:123) wrote that “member countries are expected to contribute voluntarily to cooperative ventures, from which all partners would derive mutual benefits. Some criticisms include that the diversion of trade within APEC members would create trade imbalances, market conflicts and complications with nations of other regions. The development of the FTAAP is expected to take many years, involving essential studies, evaluations and negotiations between member economies. APEC is also affected by the absence of political will and popular agitations as well as lobbying against free trade in domestic politics. The FTAAP has promoted ‘accumulation of capital’ (Luxembourg, 1964) and profit ‘accumulation on a world scale’ (Amin, 1974) through its multiplier effect on the global market. Finally, APEC development cooperation is still an unfolding process” (Browne, 1998:89). Consequently, APEC needs to reposition herself through sustainable inter-regional strategy in order to attain greater cooperation heights in world economic relations. References Ake, C. (1987) Modern Political Theory, Port Harcourt: University of Port Harcourt Press Akpuru-Aja, A. (2002) Selected Themes in International Economic Relation: Understanding Trends of Globalization and Regionalization, Enugu: Rhyce Kerex Publishers and Keny & Brothers Enterprises (1996) “International Economic Relations”, Mimeo, Uturu: Abia State University Amin, S. (1974) Accumulation on a World Scale: A Critique of the theory of Development, New York Asogwa, F. C. (1999) Understanding International Relations, Enugu: Vougasen Ltd. Bannock, G. Et al (1998) Dictionary of Economics, New York: John Wiley and Sons Inc. Bela, B. (1961) The Theory of Economic Integration, London: Allen and Unwin Browne, S. (1998) “Expanding Lateral Partnership” in Cooperation South, New York: UNDP, No. 2. Burton, J. (1972) World Society, Cambridge: Cambridge University Press Copeland, M. (1969) The Game of Nations, New York: The Book Press Cooper, R. (1968) The Economic of Interdependence, New York: McGraw Hill Dawisha, K. (1990) Eastern Europe, Gorbachev and Reform: The Great Challenge, Cambridge: Cambridge University Press Deutsch, K (1968) The Analysis of International Relations, New Jersey: Eagle Wood Cliffs Eaton, D. (1965) A Framework of Political Analysis, Englewood Cliffs: Prentice Hall Echezona, N. (1998) International Politics in the Post-cold War Era, Awka: Mekslink (1993) Hegemony or A New World Order, Awka: Mekslink El-Agraa, A. M. (Ed.) (1997) Economic Integration Worldwide, New York: St Martins Press. Evans, G. and Newnham, J. (1977) Dictionary of International Relations, Swansea: Penguin Books Feld, W. J. (1979) International Relations: A Transnational Approach, New York: Alfred Publishing Company Goldstein, J. S. (1994) International Relations, New York: Harper Collins 236

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